Home › Knowledge › Atlas of Trading Mistakes › The law of small numbers The law of small numbers
Atlas of Cognitive Biases #3 · Randomness and probability. 20 trades is nothing yet
What it looks like in trading
“This setup has an 80% win rate” after 10 trades
abandoning a good method after 5 losses in a row
judging a trader after one month
An example from a session
A simulation from Biases by the numbers #2: a trader with no edge at all (50% chance, win equal to loss) has a win rate of 60% or more after 20 trades in about 25% of cases. One in four looks talented, even though the result is pure chance.
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What you get in Hetman Capital Club
the full Atlas: 65 biases, each with a shield and a journal exercise tests of the biases on real Dow Jones data (the “Biases by the numbers” series) the trading journal and the trader's mental workshop the US session live, where you can see these biases in practice See what's inside the Club
On real Dow Jones data
A trader with no edge (50/50, win equal to loss) has a 37.7% chance of a win rate of at least 60% after 10 trades. After 50 trades it's only 10.1%.
The full analysis with a chart and conclusions: the “Biases by the numbers” series in Hetman Capital Club (in Polish).
What the research says
Tversky and Kahneman (1971) described this phenomenon among… scientists: research psychologists overestimated how well small samples would replicate a result. If professional statisticians fall for it, a trader after a dozen sessions certainly will.
Related biases
🔒 In the full version in the Club
The shield – how to defend yourself : concrete rules to write into your trading plan. An exercise for the week : how to catch this bias in your journal. Plus tests on real Dow Jones data and bias-recognition training. (The Club is in Polish.)
Unlock the full Atlas in the Club
Frequently asked questions
What is the law of small numbers? Drawing strong conclusions from a small sample. We expect a handful of results to reflect the true probability well, and they don't.
How does the law of small numbers show up in trading? Typical signs: “This setup has an 80% win rate” after 10 trades; abandoning a good method after 5 losses in a row; judging a trader after one month.
Educational content, not psychological advice or an investment recommendation.
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Now you know this bias. See how to catch it live. In Hetman Capital Club each of the 65 biases has a shield for your trading plan and a journal exercise, and in the live session I show when they really appear: after a loss, after a winning streak and before macro data. The Club is in Polish.
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